Company registration number 02815107 (England and Wales)
REMBRANDT HOTEL LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
REMBRANDT HOTEL LIMITED
COMPANY INFORMATION
Directors
A Vohra
R S Vohra
S S Vohra
J S Vohra
Secretary
R Vohra
Company number
02815107
Registered office
11 Thurloe Place
London
SW7 2RS
Auditor
Mercer & Hole LLP
21 Lombard Street
London
EC3V 9AH
REMBRANDT HOTEL LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Statement of cash flows
11
Notes to the financial statements
12 - 25
REMBRANDT HOTEL LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 1 -
The directors present the strategic report for the year ended 30 June 2023.
Review of the business
The principal activity of the company during the year was that of hoteliers.
The company's key financial and other performance indicators during the year were as follows:
2023 2022
Turnover (£'000) 12,937 7,851
Operating profit/(loss) (£'000) 2,380 (34)
Profit/(Loss) before tax (£'000) 652 (424)
Average headcount 117 97
The Average Room Rate in the year was £197.01 (2022: £154.57) and the average occupancy for the year was 73.1% (2022: 52.8%).
Principal risks and uncertainties
The company's exposure to risk is monitored on an ongoing basis by the directors. The principal risks and uncertainties facing the company are broadly grouped as competitive and legislative.
Competitive risk
The company's major asset is a luxury hotel in London. Its operations are reliant on corporate and leisure clients. It is also in competition with other similar hotels in the area.
The company regularly reviews its own performance in the light of developments elsewhere in the area.
Legislative risk
As an entity providing services to the general public, the directors and management are subject to the legislative requirements that this entails. The company addresses these issues primarily through management's systems, experience and industry knowledge to ensure correct procedures are in place. The company ensures it is covered by all necessary public liability and other insurances.
Going concern
Following three years of difficult trading conditions in the hospitality sector as a result of the Covid-19 pandemic, trade has returned to and is now exceeding pre-pandemic levels with revenues for the year of £12,936,593 (2022: £7,851,235), operating profit of £2,379,817 (2022: operating loss of £34,189) and profit after tax of £830,988 (2022: loss of £377,859).
At the balance sheet date, net current liabilities of £18,738,369 include bank loans repayable of £33,705,962 which were classified as due within one year as the debt was due to be repaid in the following financial period. After the year end in July 2023, the Company successfully refinanced its loan agreements and was granted a new 5 year facility of £37.5m. As the majority of this debt is now due in greater than one year, the company has returned to a net current asset position. Current liabilities also include deferred VAT and PAYE amounts of £192,403. These amounts are payable to HMRC on instalment plans which were granted in response to the Covid 19 pandemic. Following the year end the Company continues to pay these instalments in accordance with the agreed terms.
In assessing the appropriateness of the going concern assumption, the Directors have prepared detailed cash flow forecasts for the Company and connected hotels extending 12 months from the date of approval of these financial statements. The forecasts take into account the expected hotel occupancy levels and rates based upon known calendar of events and a targeted marketing strategy. The forecasts also take into account anticipated inflationary increase in costs, in particular utility process and staff wages. The forecasts indicate that in any reasonable scenario, the Company has sufficient cash to meet its liabilities as they fall due.
Future developments
The directors consider the hotel to be well positioned in the London hotel market.
REMBRANDT HOTEL LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 2 -
S S Vohra
Director
19 March 2024
REMBRANDT HOTEL LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2023
- 3 -
The directors present their annual report and financial statements for the year ended 30 June 2023.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
A Vohra
R S Vohra
S S Vohra
J S Vohra
Post reporting date events
On 18 July 2023, the company refinanced its loan facility. A total available facility of £37.5m was granted, of which £35m was drawndown immediately. The loan has a term of five years. The loan was secured by a legal charge over the property and undertakings of the company.
Auditor
The auditor, Mercer & Hole LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
On behalf of the board
S S Vohra
Director
19 March 2024
REMBRANDT HOTEL LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 30 JUNE 2023
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
REMBRANDT HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF REMBRANDT HOTEL LIMITED
- 5 -
Opinion
We have audited the financial statements of Rembrandt Hotel Limited (the 'company') for the year ended 30 June 2023 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity, the statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
give a true and fair view of the state of the company's affairs as at 30 June 2023 and of its profit for the year then ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
REMBRANDT HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REMBRANDT HOTEL LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
Explanation as to what extent the audit was considered capable of detecting, irregularities, including fraud
We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. These included, but were not limited to, the Companies Act 2006, employment law, and tax legislation.
We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements and the financial report (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate entries including journals to overstate revenue or understate expenditure and management bias in accounting estimates.
Audit procedures performed by the engagement team included:
discussions with management, including considerations of known or suspected instances of non- compliance with laws and regulations and fraud;
gaining an understanding of management's controls designed to prevent and detect irregularities; and
identifying and testing journal entries.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. For example, the further removed non-compliance with laws and regulations (irregularities) is from the events and transactions reflected in the financial statements, the less likely the inherently limited procedures required by auditing standards would identify it. In addition, as with any audit, there remained a higher risk of non-detection of irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls. We are not responsible for preventing non- compliance and cannot be expected to detect non-compliance with all laws and regulations.
REMBRANDT HOTEL LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF REMBRANDT HOTEL LIMITED
- 7 -
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Turner
Senior Statutory Auditor
For and on behalf of Mercer & Hole LLP
20 March 2024
Chartered Accountants
Statutory Auditor
21 Lombard Street
London
EC3V 9AH
REMBRANDT HOTEL LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
12,936,593
7,851,235
Cost of sales
(6,072,054)
(4,165,080)
Gross profit
6,864,539
3,686,155
Administrative expenses
(4,484,722)
(3,766,503)
Other operating income
46,159
Operating profit/(loss)
4
2,379,817
(34,189)
Interest receivable and similar income
7
6,558
Interest payable and similar expenses
8
(1,734,677)
(390,086)
Profit/(loss) before taxation
651,698
(424,275)
Tax on profit/(loss)
9
179,290
46,416
Profit/(loss) for the financial year
830,988
(377,859)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
REMBRANDT HOTEL LIMITED
BALANCE SHEET
AS AT 30 JUNE 2023
30 June 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Tangible assets
10
28,196,800
28,695,689
Current assets
Stocks
12
35,052
27,392
Debtors
13
17,265,912
16,656,355
Cash at bank and in hand
1,155,986
1,053,400
18,456,950
17,737,147
Creditors: amounts falling due within one year
14
(37,195,319)
(35,212,699)
Net current liabilities
(18,738,369)
(17,475,552)
Total assets less current liabilities
9,458,431
11,220,137
Creditors: amounts falling due after more than one year
15
(3,388,567)
(5,981,261)
Net assets
6,069,864
5,238,876
Capital and reserves
Called up share capital
19
100
100
Revaluation reserve
5,832,874
5,877,667
Capital redemption reserve
57,433
57,433
Profit and loss reserves
179,457
(696,324)
Total equity
6,069,864
5,238,876
The financial statements were approved by the board of directors and authorised for issue on 19 March 2024 and are signed on its behalf by:
S S Vohra
Director
Company registration number 02815107 (England and Wales)
REMBRANDT HOTEL LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2023
- 10 -
Share capital
Revaluation reserve
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 July 2021
100
5,967,253
57,433
(408,051)
5,616,735
Year ended 30 June 2022:
Loss and total comprehensive income
-
-
-
(377,859)
(377,859)
Other movements
-
(89,586)
-
89,586
-
Balance at 30 June 2022
100
5,877,667
57,433
(696,324)
5,238,876
Year ended 30 June 2023:
Profit and total comprehensive income
-
-
-
830,988
830,988
Other movements
-
(44,793)
-
44,793
-
Balance at 30 June 2023
100
5,832,874
57,433
179,457
6,069,864
REMBRANDT HOTEL LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2023
- 11 -
2023
2022
Notes
£
£
£
£
Cash flows from operating activities
Cash generated from operations
24
3,029,423
2,195,580
Interest paid
(1,688,618)
(1,017,989)
Income taxes refunded
40,525
Net cash inflow from operating activities
1,381,330
1,177,591
Investing activities
Purchase of tangible fixed assets
(238,850)
Interest received
6,558
Net cash used in investing activities
(232,292)
-
Financing activities
Repayment of borrowings
-
627,903
Repayment of bank loans
(992,694)
(785,387)
Repayment of derivatives
-
(627,903)
Net cash used in financing activities
(992,694)
(785,387)
Net increase in cash and cash equivalents
156,344
392,204
Cash and cash equivalents at beginning of year
995,539
603,335
Cash and cash equivalents at end of year
1,151,883
995,539
Relating to:
Cash at bank and in hand
1,155,986
1,053,400
Bank overdrafts included in creditors payable within one year
(4,103)
(57,861)
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2023
- 12 -
1
Accounting policies
Company information
Rembrandt Hotel Limited is a private company limited by shares incorporated in England and Wales. The registered office is 11 Thurloe Place, London SW7 2RS.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
The financial statements have been prepared under the historical cost convention, modified to include the revaluation of certain financial instruments at fair value. The principal accounting policies adopted are set out below.
1.2
Going concern
Following three years of difficult trading conditions in the hospitality sector as a result of the Covid-19 pandemic, trade has returned to and is now exceeding pre-pandemic levels with revenues for the year of £12,936,593 (2022: £7,851,235), operating profit of £2,379,817 (2022: operating loss of £34,189) and profit after tax of £830,988 (2022: loss of £377,859).true
At the balance sheet date, net current liabilities of £18,738,369 include bank loans repayable of £33,705,962 which were classified as due within one year as the debt was due to be repaid in the following financial period. After the year end in July 2023, the Company successfully refinanced its loan agreements and was granted a new 5 year facility of £37.5m. As the majority of this debt is now due in greater than one year, the company has returned to a net current asset position. Current liabilities also include deferred VAT and PAYE amounts of £192,403. These amounts are payable to HMRC on instalment plans which were granted in response to the Covid 19 pandemic. Following the year end the Company continues to pay these instalments in accordance with the agreed terms.
In assessing the appropriateness of the going concern assumption, the Directors have prepared detailed cash flow forecasts for the Company and connected hotels extending 12 months from the date of approval of these financial statements. The forecasts take into account the expected hotel occupancy levels and rates based upon known calendar of events and a targeted marketing strategy. The forecasts also take into account anticipated inflationary increase in costs, in particular utility process and staff wages. The forecasts indicate that in any reasonable scenario, the Company has sufficient cash to meet its liabilities as they fall due.
1.3
Turnover
Turnover comprises revenue recognised by the company in respect of goods and services supplied during the year, exclusive of VAT and trade discounts.
Revenue is recognised in accordance with the services rendered. Specifically Room Sales are recognised over time, being the stay in the hotel, and all other services are recognised at a point in time when they have been delivered or rendered.
1.4
Tangible fixed assets
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 13 -
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Long leasehold land and buildings
50 years
Plant and equipment
10 years
Fixtures and fittings
10 years
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
1.5
Impairment of fixed assets
At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.7
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 14 -
1.8
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 15 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.9
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the profit and loss account because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
1
Accounting policies
(Continued)
- 16 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the profit and loss account, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.
1.14
Government grants
Government grants are recognised at the fair value of the asset received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received.
A grant that specifies performance conditions is recognised in income when the performance conditions are met. Where a grant does not specify performance conditions it is recognised in income when the proceeds are received or receivable. A grant recognised before the performance criteria are satisfied is recognised as a liability.
During the prior year, the company received government income of £46,159 under the Coronavirus Job Retention Scheme (CJRS). This amount was recognised in other operating income in accordance with the performance accounting policy of accounting for government grants. No such amounts were received this year.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 17 -
2
Judgements and key sources of estimation uncertainty
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Critical judgements
Impairment of tangible fixed assets
Determine whether there are indicators of impairment of the company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.
Key sources of estimation uncertainty
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Tangible fixed assets
Tangible fixed assets are depreciated over their useful lives taking into account residual values, where appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors such as technological innovation, product life cycles and maintenance programmes. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.
Deferred taxation
An assessment is made on an annual basis regarding the extent to which it is probable that potential deferred tax assets will be recovered against the reversal of deferred tax liabilities or other future taxable profits. An asset is recognised accordingly.
3
Turnover and other revenue
2023
2022
£
£
Turnover analysed by class of business
Room
10,194,218
5,780,727
Food and beverage
1,609,007
1,178,103
Other
1,133,368
892,405
12,936,593
7,851,235
Turnover is wholly attributable to the principal activity of the company and arises solely within the United Kingdom.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 18 -
4
Operating profit/(loss)
2023
2022
Operating profit/(loss) for the year is stated after charging/(crediting):
£
£
Government grants
-
(46,159)
Depreciation of owned tangible fixed assets
737,739
789,583
Operating lease charges
84,786
65,319
5
Auditor's remuneration
2023
2022
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
19,160
17,875
For other services
Taxation compliance services
3,000
3,575
6
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Hotel staff
117
97
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
3,600,182
2,636,205
Social security costs
264,751
208,854
Pension costs
67,128
61,185
3,932,061
2,906,244
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest on bank deposits
6,558
2023
2022
Investment income includes the following:
£
£
Interest on financial assets not measured at fair value through profit or loss
6,558
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 19 -
8
Interest payable and similar expenses
2023
2022
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
1,688,618
1,017,989
Other finance costs:
Fair value movement on swap
46,059
(627,903)
1,734,677
390,086
9
Taxation
2023
2022
£
£
Current tax
Adjustments in respect of prior periods
(179,290)
(29,151)
Deferred tax
Origination and reversal of timing differences
(17,265)
Total tax credit
(179,290)
(46,416)
The actual credit for the year can be reconciled to the expected charge/(credit) for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
Profit/(loss) before taxation
651,698
(424,275)
Expected tax charge/(credit) based on the standard rate of corporation tax in the UK of 25.00% (2022: 19.00%)
162,925
(80,612)
Tax effect of expenses that are not deductible in determining taxable profit
22,791
4,856
Tax effect of income not taxable in determining taxable profit
(13,693)
Tax effect of utilisation of tax losses not previously recognised
(283,115)
Adjustments in respect of prior years
(179,290)
(29,151)
Effect of change in corporation tax rate
(29,327)
Group relief
128,866
Deferred tax adjustments in respect of prior years
(158,775)
Fixed asset timing differences
126,726
102,093
Taxation credit for the year
(179,290)
(46,416)
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 20 -
10
Tangible fixed assets
Long leasehold land and buildings
Plant and equipment
Fixtures and fittings
Total
£
£
£
£
Cost
At 1 July 2022
31,000,000
1,322,353
10,235,345
42,557,698
Additions
209,405
29,445
238,850
At 30 June 2023
31,000,000
1,531,758
10,264,790
42,796,548
Depreciation and impairment
At 1 July 2022
4,765,966
1,322,353
7,773,690
13,862,009
Depreciation charged in the year
246,000
2,787
488,952
737,739
At 30 June 2023
5,011,966
1,325,140
8,262,642
14,599,748
Carrying amount
At 30 June 2023
25,988,034
206,618
2,002,148
28,196,800
At 30 June 2022
26,234,034
2,461,655
28,695,689
The directors have based their valuation of the leasehold property on a valuation by independent chartered surveyors as at 4 August 1998. The valuation was on open market for existing use basis, in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors. In accordance with the transitional provisions of FRS 102, this valuation has not been updated and the property is carried at deemed cost.
In May 2023 the leasehold property was valued by independent chartered surveyors. Based on existing market value (post refurbishment) the leasehold property was valued at £102.5m.
11
Financial instruments
2023
2022
£
£
Carrying amount of financial assets
Debt instruments measured at amortised cost
16,497,709
17,010,185
Instruments measured at fair value through profit or loss
-
46,059
Carrying amount of financial liabilities
Measured at fair value through profit or loss
- Other financial liabilities
-
-
Measured at amortised cost
39,833,959
40,410,374
Financial assets measured at amortised cost comprise trade and other debtors, amounts due from group undertakings, and cash at bank and in hand.
Financial liabilities measured at amortised cost comprise trade and other creditors, bank loans, loans due to group and other related parties, and accrued expenses.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 21 -
12
Stocks
2023
2022
£
£
Raw materials and consumables
35,052
27,392
Stock recognised in cost of sales during the year as an expense was £550,852 (2022 - £357,304).
13
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
421,806
344,842
Corporation tax recoverable
161,536
Amounts owed by group undertakings
3,007,278
2,733,205
Other debtors
194,000
Prepayments and accrued income
570,881
612,425
4,355,501
3,690,472
Deferred tax asset (note 17)
35,786
35,786
4,391,287
3,726,258
2023
2022
Amounts falling due after more than one year:
£
£
Amounts owed by group undertakings
12,874,625
12,884,038
Derivative financial instruments
-
46,059
12,874,625
12,930,097
Total debtors
17,265,912
16,656,355
14
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
33,710,065
32,163,823
Trade creditors
849,061
1,218,583
Amounts owed to group undertakings
86,858
56,808
Corporation tax
(22,771)
Other taxation and social security
749,927
806,357
Other creditors
813,889
637,161
Accruals and deferred income
985,519
352,738
37,195,319
35,212,699
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 22 -
15
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Bank loans and overdrafts
16
2,592,694
Amounts owed to group undertakings
3,388,567
3,388,567
3,388,567
5,981,261
16
Loans and overdrafts
2023
2022
£
£
Bank loans
33,705,962
34,698,656
Bank overdrafts
4,103
57,861
33,710,065
34,756,517
Payable within one year
33,710,065
32,163,823
Payable after one year
2,592,694
33,710,065
34,756,517
During the year the bank loans were secured by a first and only debenture over the whole of the assets and undertakings of Rembrandt Hotel Limited including the uncalled capital and by a legal charge over the Rembrandt Hotel premises.
On 18 July 2023, the company refinanced its loan facility. A total available facility of £37.5m was granted, of which £35m was drawndown immediately. The loan has a term of five years. The loan was secured by a legal charge over the property and undertakings of the company.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Assets
Assets
2023
2022
Balances:
£
£
Accelerated capital allowances
35,786
35,786
There were no deferred tax movements in the year.
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 23 -
18
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
67,128
61,185
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2023
2022
2023
2022
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
100
100
100
100
20
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
2,000
2,581
Between two and five years
8,000
8,000
In over five years
1,188,000
1,190,000
1,198,000
1,200,581
21
Related party transactions
Transactions with related parties
During the year the company paid management fees of £1,200,000 (2022 - £1,200,000) to Sarova Hotels Limited, a company ultimately controlled by Vohra family interests.
2023
2022
Amounts due to related parties
£
£
Stargate Holdings Limited
3,388,567
3,388,567
The Abbey Hotel Limited
-
355
The Bull Hotel Limited
86,858
56,453
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
21
Related party transactions
(Continued)
- 24 -
The following amounts were outstanding at the reporting end date:
2023
2022
Amounts due from related parties
£
£
The Bull Hotel Limited
2,904
11,393
The Abbey Hotel Limited
1,033
1,548
Sir Christopher Wren Hotel
7,225,529
7,153,864
Sparco International
5,652,000
5,735,000
Sarova Hotels Limited
3,000,438
2,715,438
22
Events after the reporting date
On 18 July 2023, the company refinanced its loan facility. A total available facility of £37.5m was granted, of which £35m was drawndown immediately. The loan has a term of five years. The loan was secured by a legal charge over the property and undertakings of the company.
23
Ultimate controlling party
The immediate parent company is Stargate Holdings Limited, a company incorporated in the British Virgin Islands.
The ultimate controlling party is Vohra family interests.
24
Cash generated from operations
2023
2022
£
£
Profit/(loss) for the year after tax
830,988
(377,859)
Adjustments for:
Taxation credited
(179,290)
(46,416)
Finance costs
1,734,677
390,086
Investment income
(6,558)
Depreciation and impairment of tangible fixed assets
737,739
789,583
Movements in working capital:
Increase in stocks
(7,660)
(5,811)
(Increase)/decrease in debtors
(494,080)
429,737
Increase in creditors
413,607
1,016,260
Cash generated from operations
3,029,423
2,195,580
REMBRANDT HOTEL LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2023
- 25 -
25
Analysis of changes in net debt
1 July 2022
Cash flows
Market value movements
30 June 2023
£
£
£
£
Cash at bank and in hand
1,053,400
102,586
-
1,155,986
Bank overdrafts
(57,861)
53,758
-
(4,103)
995,539
156,344
-
1,151,883
Borrowings excluding overdrafts
(34,698,656)
1,038,753
(46,059)
(33,705,962)
(33,703,117)
1,195,097
(46,059)
(32,554,079)
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